SAN FRANCISCO, Sept. 19, 2011 /PRNewswire/ -- GeoPetro Resources Company (NYSE Amex: GPR) ("GeoPetro", "we", "our" or the "Company") is pleased to announce that on September 13, 2011, its wholly-owned, indirect subsidiary, Madisonville Midstream LLC ("MML") closed a transaction with Peregrine Midstream Partners LLC ("Peregrine") to sell certain idle and non-income producing equipment ("assets") at its gas treatment plant located in Madisonville, Madison County, Texas for $9,250,000. Peregrine had previously paid non-refundable deposits of $1,575,000 prior to closing, and Peregrine paid the remaining purchase price balance of $7,675,000 on September 13, 2011.
Simultaneously with the closing of the Peregrine transaction, the Company repaid its secured loan from the Bank of Oklahoma. The loan, in the original principal amount of $7.7 million, was made in December, 2008 when GeoPetro, through its subsidiary MML, purchased the Madisonville gas treatment plant.
The Company is further pleased to announce that field work is continuing on the maintenance and upgrade of the gas treatment plant and workovers of the Magness and Fannin wells in the Madisonville Field. We expect to complete the work and reestablish production from the two wells at an estimated rate of 8 million cubic feet of natural gas per day in October, 2011. At that level of production, our Madisonville Project is expected to be cash flow positive.
Addressing the closing of the Peregrine transaction and the repayment in full of the Bank of Oklahoma loan, GeoPetro's President & CEO, Stuart J. Doshi commented "Closing the Peregrine transaction and retiring our bank debt are significant milestones for GeoPetro. We continue to prudently manage and enhance our liquidity and capital positions. With much improved liquidity and a stronger balance sheet, the Company is now well-positioned to focus on enhancing our gas production in Madisonville Field, continuing to explore and develop our other projects, and implementing strategies to increase shareholder value.""The Company is also focused on securing an industry partner to do additional workovers on the Mitchell and Wilson wells in the Madisonville Field to further increase production, and undertake the drilling of a deep well to test six (6) highly prospective zones in the Madisonville Field. Our 3D seismic shows a very attractive structural closure with a high potential for a major discovery."